The person with dementia has become increasingly suspicious, how to I respond?

A combination of memory loss and disorientation can cause the person with dementia to perceive situations in atypical ways. They may become suspicious of others, including you, and make accusations of theft, infidelity, or other offensive behavior.
As hard as it may be to be accused of something you did not do, try not to become offended. Remember that the behavior is due to the way the disease is affecting your person with dementia's brain. Don't try to argue with your relative or convince him or her of your innocence. Instead, share a simple answer or response, such as, "I see that you're upset about your missing wallet, so I'll do my best to find it for you." Avoid giving wordy or complicated explanations. Redirection to another activity can be very effective in these situations. It's also helpful to store "back-ups" of items that are frequently misplaced (e.g., baseball caps, purses).